a r t i c l e i n f o The concept of sustainable economic growth is closely linked with the agricultural growth. This is especially true in the context of underdeveloped countries. Pakistan is a typical underdeveloped country that has huge labor force employed in conventional rural economy and more than half of the population relies on agriculture for subsistence. The study examines the agricul...

This paper studies the interactions of fiscal and monetary policies in the presence of fiscal spillovers within a monetary union. When capital markets are integrated, the fiscal policy of any member country will influence equilibrium wages and interest rates across the whole union. Thus there are fiscal spillovers within a federation. Within a general class of monetary policy rules, there does ...

ABSTRACT The International Monetary Fund (IMF) is by design an economic institution, with exclusive mandate. Traditionally, this has meant that the IMF focused its work on monetary, fiscal, exchange rate, and financial sector policies, along closely related structural aspects. In recent years, however, IMF’s widened to cover a broader range of substantive topics, including governance anti-corru...

The U.S. federal government is facing the prospect of exponentially rising entitlement obligations that are threatening to push the debt-to-GDP ratio to historically unparalleled levels. In an effort to understand the economic consequences of these projected debt run-ups, this paper takes a stand on how future policy must adjust and examines its implications for the aggregate economy. Assuming ...

Under EMU,monetary policy is oriented towards union-wide economic conditions, and cannot effectively address country-specific macroeconomic disturbances. Should national fiscal policy be used more actively, for stabilizing individual economies, now that exchange rate changes among member countries are no longer possible? Several recent studies answer this important normative question, based on ...

This paper studies the effects of monetary policy rules in a fiscal federation, such as the European Union. The focus of the analysis is the interaction between the fiscal policy of member countries (regions) and the monetary authority. Each of the countries structures its fiscal policy (spending and taxes) with the interests of its citizens in mind. Ricardian equivalence does not hold due to t...

This paper reconsiders the role of separation principles between monetary and fiscal policies which in ‘normal’ times are seen as being conducive to stable outcomes of policymaking. Such principles are discussed for both ordinary nation states (i.e. ‘single economies’, characterized by one monetary and one fiscal policy) and ‘monetary unions’ (characterized by one monetary and many fiscal polic...

The interaction of monetary and fiscal policies is a crucial issue in a highly integrated economic area as the European Union. We investigate to which extent the EMU, that introduced a common monetary policy and restrictions on fiscal policy at the national level, benefits from macroeconomic policy cooperation due to the various interactions, spillovers and externalities from national macroecon...

Monetary and fiscal policy interactions are studied in a stochastic maximizing model. Policy is ‘active’ or ‘passive’ depending on its responsiveness to government debt shocks. Schemes for financing deficits and, therefore, the existence and uniqueness of equilibria depend on two policy parameters. The model is used to: (i) characterize the equilibria implied by various financing schemes, (ii) ...